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Stevens Center is a nonprofit organization devoted its stagingplays for children. The theater has a very small | ||||||
full-time professional administrative staff. Through a specialarrangement with the actors' union, actors | ||||||
and directors rehearse without pay and are paid only for actualperformances. | ||||||
The costs from the current year's planning budget appear below.Steven Center had tentatively planned to put | ||||||
on six different productions with a total of 108 performances.For example, one of the productions was The Lion King, | ||||||
which has a six-week run with three performances on eachweekend. | ||||||
Stevens Center | ||||||
Costs from the Planning Budget | ||||||
For the Year Ended December 31 | ||||||
Budgeted number of productions | 6 | |||||
Budgeted number of performances | 108 | |||||
Actors' and directors' wages | $215,000 | |||||
Stagehands' wages | 31,900 | |||||
Ticket booth personnel and ushers' wages | 16,400 | |||||
Scenery, costumes, and props | 107,900 | |||||
Theater hall rent | 53,000 | |||||
Printed programs | 26,800 | |||||
Publicity | 12,200 | |||||
Administrative expense | 44,200 | |||||
Total | $507,400 | |||||
Some of the costs vary with the number of productions, some withthe number of performances, and | ||||||
some are fixed and depend on neither the number of productionsnor the number of performances. | ||||||
The costs of scenery, costumes, props, and publicity vary withthe number of productions. | ||||||
It doesn't make any differences how many times The Lion King isperformed, the cost of the | ||||||
scenery is the same. Likewise, the cost of publicizing a playwith posters and radio commericals is the | ||||||
same whether there are 10,20 or 30 performances of the play. Onthe other hand, the wages of | ||||||
the actors, directors, stagehands, ticket booth personnel, andushers vary with the number of | ||||||
perofrmances. The greater the number of performances, the higherthe wage costs will be. Similarily, | ||||||
the costs of renting the hall and printing the programs willvary with the number of performances. | ||||||
Administrative expenses are more difficult to pin down, but thebest estimate is that approximately | ||||||
75% of the budgeted costs are fixed, 15% depend on the number ofproductions staged, and the | ||||||
remaining 10% depend on the number of performances. | ||||||
After the beginning of the year, the board of directors of thetheater authorized expanding the | ||||||
theater's program to seven productions and a total of 168performances. Not surprisingly, actual | ||||||
costs were considerably higher than the costs from the planningbudget. (Grants from donors | ||||||
and ticket sales were also correspondingly higher, but are notshown here.) Data concerning the | ||||||
actual costs appear below: | ||||||
Stevens Center | ||||||
Costs from the Planning Budget | ||||||
For the Year Ended December 31 | ||||||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers' wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
1. Prepare a flexible budget for the Stevens Center based on theactual activity of the year. | ||||||
2. Prepare a flexible budget performance report for the yearthat shows both spending variance | ||||||
and activity variances. | ||||||
Stevens Theater | ||||||
Flexible Budget Performance Report | ||||||
For the Year Ended December 31 | ||||||
Actual Results | Spending Variances | Flexible Budget | Activity Variances | Planning Budget | ||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers' wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
3. If you were on the board of directors of the theater, wouldyou be pleased with how | ||||||
costs were controlled during the year? Why or why not? | ||||||
4. The cost formula provide figures for the average cost perproduction and average cost per performance. | ||||||
How accurate do you think these figures would be for predictingthe cost of a new production or of an additiional performance of aparticular production? | ||||||
Stevens Center isa nonprofit organization devoted its staging plays for children.The theater has a very small | ||||||
full-time professionaladministrative staff. Through a special arrangement with theactors' union, actors | ||||||
and directors rehearse withoutpay and are paid only for actual performances. | ||||||
The costs from the currentyear's planning budget appear below. Steven Center had tentativelyplanned to put | ||||||
on six different productionswith a total of 108 performances. For example, one of theproductions was The Lion King, | ||||||
which has a six-week run withthree performances on each weekend. | ||||||
StevensCenter | ||||||
Costs from the PlanningBudget | ||||||
For the Year Ended December31 | ||||||
Budgeted number of productions | 6 | |||||
Budgeted number of performances | 108 | |||||
Actors' and directors' wages | $215,000 | |||||
Stagehands' wages | 31,900 | |||||
Ticket booth personnel and ushers'wages | 16,400 | |||||
Scenery, costumes, and props | 107,900 | |||||
Theater hall rent | 53,000 | |||||
Printed programs | 26,800 | |||||
Publicity | 12,200 | |||||
Administrative expense | 44,200 | |||||
Total | $507,400 | |||||
Some of the costs vary withthe number of productions, some with the number of performances,and | ||||||
some are fixed and depend onneither the number of productions nor the number ofperformances. | ||||||
The costs of scenery,costumes, props, and publicity vary with the number ofproductions. | ||||||
It doesn't make anydifferences how many times The Lion King is performed, the cost ofthe | ||||||
scenery is the same. Likewise,the cost of publicizing a play with posters and radio commericalsis the | ||||||
same whether there are 10,20or 30 performances of the play. On the other hand, the wagesof | ||||||
the actors, directors,stagehands, ticket booth personnel, and ushers vary with the numberof | ||||||
perofrmances. The greater thenumber of performances, the higher the wage costs will be.Similarily, | ||||||
the costs of renting the halland printing the programs will vary with the number ofperformances. | ||||||
Administrative expenses aremore difficult to pin down, but the best estimate is thatapproximately | ||||||
75% of the budgeted costs arefixed, 15% depend on the number of productions staged, and the | ||||||
remaining 10% depend on thenumber of performances. | ||||||
After the beginning of theyear, the board of directors of the theater authorized expandingthe | ||||||
theater's program to sevenproductions and a total of 168 performances. Not surprisingly,actual | ||||||
costs were considerably higherthan the costs from the planning budget. (Grants from donors | ||||||
and ticket sales were alsocorrespondingly higher, but are not shown here.) Data concerningthe | ||||||
actual costs appear below: | ||||||
StevensCenter | ||||||
Costs from the PlanningBudget | ||||||
For the Year Ended December31 | ||||||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers'wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
1. Prepare a flexible budgetfor the Stevens Center based on the actual activity of theyear. | ||||||